tv Key Capitol Hill Hearings CSPAN June 5, 2015 10:00pm-12:01am EDT
in our experience at looking at places around the world as they cooperate their interests and they can pass boundaries very easily. >> perhaps we could have something called a national security agency where we could track this kind of data. something like that. >> sounds like a good idea. >> i apologize to my colleagues for going over town. >> have you pinpointed any country from which this came? >> we have to be careful with
the active investigation mr. chairman, but if you use a router or server in a different country on another side of the world but at this stage, in the report it said it was originally russia. >> they're not going to name any country or countries? >> at this time we don't have enough information to share. >> let me make sure i'm getting this right. center drive x6 for the last six
days the united states senate and 41 members of the united states without personally identifying any information whatsoever. were getting ready to take that authority away from them. we had a hundred thousand americans that had their identity stolen. they know how much money i make, how much money my wife makes where i go to church if i buy stocks and bonds. it's a lot more personally identifying information in
whatever the nsa does and there looking out for our safety. i just had to make that statement. secondly it's ironic that they e-mail me to say my credit card changed and i need to email them. that just came in at 1024 1024 on my blackberry. >> i had mine stolen about three years ago and i want to commend the department for the echo five or protection. i guess my question is on the ip numbers, district columbia in georgia and one other state gives taxpayers the option to apply for an ip number which is a self identifying number for tax return. is that correct? >> that's correct. >> and now there's 1.5 million
of those issued. >> yes they have been issued to those who have been victims of identity theft. were trying theft. were trying to get more people in a pilot program. we've had a really tivoli relatively modest interest in that. >> were trying to find out what the cost is. >> is that foolproof? >> somewhat. its use for only one thing. it has no other use then to authenticate that the taxpayer gets the ip and is the legitimate taxpayer. if they keep it secure there is
no way anyone else will get it and the returns are safe. >> if it is foolproof it seems like you would give every american the ability to apply for one of those. you would give them all the opportunity to get one. >> what were looking at with the pen is if people lose it we have a lot of people, 50 million people with ip pins and half of them lose it, were going to have a lot of black round noise trying to get them replacement pins. it is ultimately a way to go when we get down to the bottom of it. our analysis over five years it. our analysis over five years is that our authentication is going to be the key. whether it's authenticating you to get a pin or have a way of
sharing a way of sharing information with who is the customer. are you who you say you are. why do we have to a syndicate you to make sure you're not someone impersonating you. how do we get even or get ahead of the game to try to make it work. ultimately will never put them out of business but the goal is to make it so difficult and expensive that it's not worth their while. >> i've been thinking as i listen to i listen to both of your testimony that part of the best way to protect the limit and fraud is to change the way we do our taxation. there's a book called a fair tax that talks about going to a retail sales tax which
eliminates the payroll tax in the real estate tax. wouldn't this be a way to protect against identity theft? >> i cannot give you a definitive answer on that one. suffice it one. suffice it to say, the more information and the earlier the irs gets it and the easier way of doing taxes and the various proposals, such as the ones you mentioned on and we don't know whether or not they would have a direct impact on identity theft. >> if i paid my tax on i paid my tax on a retail basis it would eliminate any of the self identifying information that could be collected which would be a protection against identity theft.
the issue globally which still exists with your credit card is are criminals accessing enough personal information to access your bank account, your credit cards, your mortgage information. if we were dealing with a system that collected money through a fair tax or sales tax in that regard we wouldn't have a system that has individual information. >> i appreciate the work that you are trying to do. >> i might just note that the irony of that is that our employees appreciated was that we spent an hour on a briefing of identity theft. >> thank you mr. chairman. >> can you tell me how many
south carolinians have been affected by the breach? >> i cannot tell you that. as i said earlier anybody in south carolina should be getting a letter in the next few days. we should be getting that information in a not a next couple days. it's not segregated by state at this point. >> we are concerned about the irs. your your agency is the agency that has the power of intimidation. there were many americans violated by this breach and they are passionate and concerned about the activities at the irs and it doesn't simply start with the breach.
it started when we had the conversation last time about groups being targeted because of their religious bleats or political doctrine. inflows into the loaner emails and the ability to figure out e-mails and the ability to figure out if you have or if you don't have the e-mail. it continues on down the road when they call during tax season and they're unable to get someone to answer so they have these courtesy hangups. it is consistent as i talked to my constituents that they are concerned that the breach will only add more fire to people who are absolutely petrified by the irs. now having their information exposed to criminal elements drug cartels is even more concerning. i'd love to hear what it is that you are doing in order to secure the id at the irs. i also have a
irs. i also have a question about the 19 recommendations that were made in only eight were implemented. what were doing for years is security is a high priority for us. it's based on information stolen elsewhere and you file a false return and we know that the difficult situation for taxpayers. if that happens to a taxpayer they get prompt response from us they've noticed that we work closely with these agencies and we value their opinion. we've asked them to look at our system and make sure they are breached. we get being over 1 billion times a a billion times a year. we are not under any illusions that we are not at risk. we spend as much time and effort and resources as we can focused on that. anytime we make a change in a system, anytime we
anytime we make a change in an application and look at the security aspects of it as inspector general said we are trying to provide better taxpayer service. we did not answer the phones at anything like the rate we would like to have. we had 23 million transcripts downloaded last year. those were requests that they would've had to make otherwise on the phone or in person. so to the extent that we can provide better service that's a high priority for us. we service, that's a high priority for us. we take it seriously and taxpayers have to feel that they're going to get treated fairly no matter who they are or who they voted for or what organization they belong to. we implemented all of those recommendations to. we implemented all of those recommendations in that regard. we take their concerns seriously and they are ultimately our customers. we work for taxpayers and not for customers. we work for taxpayers and not for anybody else. >> from a resourcing standpoint it seems like the obama administration has about
$5 billion. in the last decade or so over $10 billion has been spent and this doesn't seem like the security we would expect. of the recommendations that were made previously for corrective action, to fears that only eight of those 19 were implemented and perhaps some were closed before they were fully implemented. >> i will in the amounts amount of time that we have left and i would request to submit right response in writing. we have made a total of 44 recommendations since march of this year. eighteen of those have been security orders and have yet to be recommendations from security orders that have yet to be implemented.
ten of those come from orders that were completed during fiscal year 2008 to 2012 so they are very dated. there are some of the examples of the oldest recommendations that were made. >> can you name one? >> the irs should require system administrators and their benefactors to reveal and validate the tax system. it should only be allowed for people that have need for those information. >> i think it's important to point out the 104000-dollar figure is used a lot. we have to keep in mind those
are the records that were access. a lot more people could be affected by that. their information is contained within those reports. i cannot give you a definitive number at this time and i don't think the commissioner can either but it is more than a hundred and 4000 people. >> mr. chairman think you very much. thank you for your appearance here and your service. >> i want to i want to talk about the issue through the lens of pennsylvania. we had a number of reports and i've heard directly from law enforcement about identity theft not just the broad-based or the significant challenge but specifically because it often
involves many different agencies. for example in addition to the irs, the department of justice social security administration and social -- law-enforcement. i'd ask about interagency and in terrace state coordination. tell me about that in terms of what you've been able to do since you've been commissioner. >> all of this exploded in 2010 and 2012. in it over whelmed law-enforcement and it overwhelms everyone. since then we've established successful partnerships with law enforcement across the country
together with the department of justice and attorneys we have a very active criminal investigation division. we don't investigate or bring charges. we have to work with partnership with lon forstmann across the country. that has been very effective. we have put over 2000 people in jail who have been convicted. one of the realities of this is district attorneys at the county level are among the law-enforcement officials that have to get involved. i'd ask for your commitment to help on a coordinated approach to help solve the problem.
>> we can't solve this by yourself. we need as much help as we can. we have a great help from the inspector general as well. >> i want to turn to the question of resources. often we in the congress will point to a problem and that's part of our job in terms of oversight and making sure taxpayers have their concerns responded to. as we point fingers, we should also be constructive in terms of providing support. sometimes it happens and sometimes it doesn't. on the question of resources you say congress can help by approving the president's budget request witching clued's $101 million specifically devoted to identity theft and refund fraud.
plus a hundred and 80,000004 technology infrastructure. so 101 million+ $180 million. 101 million plus $180 million. can you tell us what that money would be used for? >> yes on the one hand in terms of identity theft it would be a way to speed up our process and respond more specifically to individual taxpayers and their concerns. most importantly it would allow us to upgrade our it infrastructure. we are running antiquated systems which are no longer supported by software companies and i would stress this particular problem was not about resources. my concern is about the overall ongoing problem of criminals around the world and the security of the entire system. that's where the weakness is in
our antiquated system comes to bear. we need to continue to improve the overall system. >> i hope if there's any additional, by way of authority or resources when it comes to dealing with the international dimensions of this which i'm sure are challenging, i hope you indicate that to us. >> mr. general i'll get it question to you for the record since were out of time but thank you for your work. >> mr. chairman thank you. thanks for holding this hearing. i want to think our witnesses for being here also. commissioner and i want to also. commissioner and i want to thank you for the call had yesterday. it was very helpful and hopefully we can move forward and i'll even bring up bring them up for that matter. the i think there issues that
are important to my home state. i've heard from state. i've heard from many of my constituents. they have strong concerns over the irs proposed changes. the filing of information returns due to the administrative burden propose, 13000 customers have signed a petition for the repeat porting threshold for bingo and other machines and i to share their concerns. across the u.s. the gaming industry supports a large number of jobs. with had multiple conversations with your office in regard to these proposed rules. with that said i'd like any other taxpayers that were kept in the dark regard regarding new
rules. your comment period was extended and i appreciate i appreciate that since it did take a couple months to get a response from your office. as i mentioned yesterday my comments will be coming in the next week or so. thank you for your help and support and extending the deadlines in order to get those questions in. the chairman talked a little bit about public trust for the irs. you are familiar with that. the number of weaknesses, the ability to effectively protect confidentiality and taxpayer data unfortunately was not implemented. the inspector general is here and he spoke on the and you alluded to it as well. it is my opinion that tax reform
would provide simpler code and better tools to combat tax related identity theft. i told you yesterday on the phone i'm here to help. how can i help you? >> while i appreciate that and i appreciate the chairman's clarity about what we need to work together on this. it's not this. it's not a political issue as we've said for some time. we need to get information returns earlier that would be a great help to us. we need to have the authority to mask w twos so they are being produced by legitimate companies and not fraudulent companies. we need to work with the tax preparers and software companies as well as the states to provide minimum requirements for data that authenticates taxpayers
when they file their return. ultimately as i have noted, our discussion today is not about a response to a funding shortage but the challenge we face more broadly dealing with criminal enterprises around the world. that does depend on making sure we have adequate rending to make sure we can rebuild our systems and bring them into the earlier 21st century rather than the late 19th century. >> they discussed an option that would allow numbers to be put on the forms. what you think of that? >> forms. what you think of that? >> we have talked about just putting the last four digits on the w-2 form. what's more importantly as may be putting hashtags on those forms. a number of companies can
provide the paper. we may need to be able to have those who produce w-2s to make sure the identifier is legitimate. >> you think that would be happy helpful? >> i do. >> let me ask you an unrelated question while you're here. it's an important subject. they were investigating a hard drive crash. they gave the committee the last of the e-mail. as i understand it the next step as i understand it the next step is for you to provide us with a report on your investigation.
now that all the recovery work is done can we get a commitment from you a commitment from you to submit a report on the hard drive crash by mid-june? >> i can commit to having it to you by the end of the month. i spoke with my chief investigator prior to the hearing and as of now we have conducted over 100 100 almost 150 interviews related to the loss of e-mails. as you can imagine with each interview that leads to more information that needs to be tracked down. given the nature of this matter we need to be as thorough as possible and we are endeavoring to do just that. i can say there is still some very important interviews to come. we will do our best to try to accommodate that request but i i cannot assure you we will have it by the end of the month.
>> okay, we will live with that. we'd like to get our final report if we can. i just want it on the record to say i'd be delighted to get everybody's final reports. >> i'm not sure that was helpful. >> senator robert's had a question robert had a question or two and then i'd like to start the second round. >> nina olson leads the taxpayer office and in her annual report she noted that victims must often navigate irs operations and recount their experience time and time again to employees even when cases remain in the system. on average the agency took nearly six months to resolve cases. she had of the cases were often
closed prematurely before all of the issues had been fully addressed. she recommended a single officer be assigned to handle each case. she spoke to a broader issue which i think sums up what were after, grinning taxpayers in enhanced access to their tax information which was the goal that even congress agreed to when we pass this bill. the overriding priority must be to protect confidential information. is that a fair statement? >> the inspector general said it's a balancing act. we have 23 million successful downloads of the transcript. if those people had to call us or show up in person it would have been a problem. on the other hand we need to make sure we are secure as possible.
what's happening across the economy's customers and taxpayers now understand that it may be harder to get access to their account. not harder that it takes you two weeks, but there may be more hurdles you have to go through. you may have to have more information available to get information. i think taxpayers and customers are willing to accept the higher level of birth burden. it should be noted that over 20% of people who try to get their transcript downloaded can't answer their own personal questions. this also reminds us that no matter how important it is to be providing excellent service we service, we have to focus as much as we can on the security of the data and that is a important issue for us. >> the irs asks taxpayers not to contact the agencies because it
will already slow down the overburdened agency. it's like hurry up and wait. they won't have to wait long. the letters were already sent out to the 104,000 people. >> what does the letter say? >> tells them how to login and go to our website if they have questions where we've posted frequently asked questions about the situation and what can be done. we advise them in that letter that we have marked their account so that no one else can file a return with that information. >> i appreciate that. thank you mr. chairman. >> let me just ask i apologize i should've called on you first.
>> i've already had one bite of the apple while you were out of the room so i'll wait my turn. >> in 2012 they did an audit of the security response center. that is what's used for preventing and detecting computer threats. in that 2012 audit they found that the irs is not monitoring 34% of its servers and you noted that without appropriate monitoring this system may not timely detect cyber since it security incidents. to have a plan to reassess this
system and is this what led to the breach? >> yes we will also be monitoring that. >> the irs is planning to expand the online services it offers in the coming years. one example is the secure messaging pilot program that is going to launch in 2016. that will allow the irs to e-mail tax payers about sensitive information. that is something they information. that is something they have not done in the past. in light of the recent data breach do you have concern about the security of online services they plan to introduce? what are they going to do? >> we have sent a message that
says we will never reach out to you by e-mail or the like and so they will have to engage in a public service to inform taxpayers about these new ways of approaching the system of tax administration. alternately it is a worthwhile goal to be able to contact people by way of e-mail and alternate ways versus paper contact which is much more expensive. and when you have individuals -- so it's a way for the irs to more efficiently medicate with taxpayers regarding their tax obligations. that's a good thing but that takes a lot of looking at the
overall proposal how it's implemented and the impact that it has on taxpayers. >> thank you we appreciate the service that you render. is a tough job for both of you. do you have any questions? >> i just have a couple of quick a couple of quick questions. i probably won't take all my five minutes but their issues i think are important. the last question i asked was how can we help? i want you to explain to me why critical authority should be renewed? >> we can find someone like the head of our information technology system and we can recruit them and if we find the right person we can hire them and they can start immediately. the government process requires
us to go through a process that takes three or four months. most the time when you're recruiting, people can't wait three or four months. we've had two people we tried to hire in the it department but they did not want to participate in a three to five month process and therefore they turned us down. >> what's been the impact between then and today? >> we had 29 people on critical authorities and we never used more than 34 of 34 of them. we are down now to 15 or 16. we have lost our senior international expert we've lost at deputy cio we lost three people in big data analysis including our expert on data and authentication. authentication. their term ran out and we have
not been able to replace them. >> you know your budget a lot better than i do, but i do, but in 2014 you spent $2.4 billion or 21% of your budget on information technology. with that budget being that substantial, do you have the experts that you need in cyber security? >> at this point we have the experts. at this point the head of security is on the critical team. much of that money goes to just maintaining our system. we had a take 300 million out of other at it programs. do you feel you have qualified
teams? >> yes we have a dedicated and qualified workforce. even with all the education and abuse they take, they are dedicated to the mission which is helping taxpayers. >> my understanding is that he has a couple questions but personally i like to thank both of you for being here. i appreciate the testimony you have given here today. you have tough job there's no question about it. i don't know anybody who approaches it with a smile like you do. i think there's something wrong with you that you are not upset every day. on the other hand i know you aren't and we are very
appreciative of the hard work you do. it's important that we have both of you working in the best interest of our country and our taxpayers. i've taxpayers. i've appreciated you over the time that i've known you and the time that you've been on the committee. with that let's turn to another question. >> ms. state treasurer and an old governor. i've been thinking about the tax on the irs. has anyone given any thought on how to prepare information and defend treasuries?
>> were sharing information and trying to provide them with as much assistance as we can about what we know. as to say this is no longer the problem of any organization, this is a systemic problem across the entire economy. there's a website that someone sent me that had an indication that the 25 cyber attacks in may and we were just one of those 25. we take it seriously and we need to deal with it aggressively but we need to understand it's in the context of a significant significant and systemic set of attacks. >> i heard you describing the information in the letters going out.
we will elaborate on that. >> an individual protection pin is a separate six digit number that's given to taxpayers if they are a victim of fraud. there is there's a point where they will file the ip pin. if it is not filed, the return would not be accepted. it won't allow someone to file a return with their social security number. >> does the taxpayer need convenient means to getting old returns? >> that's the conundrum you face.
we can't put it back up unless we are satisfied the security is appropriate. it does mean it's going to be more difficult for taxpayers and some of them can't get through the existing security. we are looking at the lessons learned from this event and are delving into it to find out what happened and what could be done with the security issues to make it more difficult or impossible to happen again. it's a continued trade-off to try to pit provide as much information to taxpayers as we can but keeping it safe at the same time. there's a multi- year up effort
to upgrade the computer system. >> your point is well taken, we are working on upgrading the system for some time and we won't be able to do it in one year. we are working on a lot of things to give them a longer term view of what it will take to upgrade the systems and provide secure increased availability to taxpayers. >> we talked a moment ago about a partner ship with the states and we can learn a few things from them to prevent against these attacks. are there any other countries we are working with that respond to these challenges that we may be able to gleam some helpful ideas from? >> we are in contacts, i belong
to a group of tax administrators along the world around the world and we have more of these challenges than others but security is on all of their mind. those with value-added tax are less concerned with individual taxpayer information as we discussed earlier today. in the meetings i've had with them we seem to be having more challenges as an economy as well is a tax administration system. >> last question a year or so ago there was a firm that specializes in protection.
some of them drove down and said these are the folks in these or where they're located in these are the attacks being launched against our country. the chinese didn't accept it very well. i always like to focus on root causes. i keep trying to figure out how we go to a approach cause this is just spreading. i'd like to say that the third time is a charm after all these breaches, but how do we go about the root cause of getting to the
problem? is there anything we can do about that? >> of course having the world's largest economy it attracts the bad guys. while i'm not familiar with this study that you cited indicating china is a major part of these problems, a lot of them did emulate former soviet places. it's too many people that have too much time on their hands with the sophistication that relates to computers and networks and servers and it is truly a challenge, not just for the irs this is a federal
state, local, federal and national problem. i don't see it ending anytime soon. as soon as we increase our security, the bad guys will security, the bad guys will increase their efforts and they have a lot of time on their hands. >> we've spent a lot of times trying to focus on the symptoms of problems and we don't always focus on the root causes. one of the things that it is important to focus on symptoms and solutions but we also need to focus on root problems. >> mr. chairman confirms tax
now mr. chairman we've had six hearings on identity theft and yet we continue to bring in irs. let me take care of this by passing legislation. i follow legislation, you fallow legislation. your legislation has a lot of similarities between our simulation legislation. we should be able to get something moving. so, put on the record mr. commissioner, what tool would help you on this which i think this, which i think is in the legislation, but you want to get that out there on the record. >> yes, as we said earlier in the session we've got increasing
support on the hill for it. we need to get information return earlier. we need to get them in january when employees get them. we need to have them before we send out refund so we have a better chance of matching. we need to be able to use hashtags on those w-2s to make sure the w-2s are accurate. criminals are generating force corporations and generating force false w-2s. we need to increase the penalties for engaging in identity theft and refund fraud. those are in our budget proposal and in your legislation. i'll leave it with the chairman's but together final package that would put together
a set of tools. there is no magic silver bullet that tomorrow morning will put this all to an end. we have to continue to be diligent and do everything we can with our systems and security and monitoring. clearly the items that are contained in the legislative discussions are going to be important. okay that's my point mr. chairman. >> this is what's shocking. this was about four years ago crime in tampa florida dropped burglaries auto thefts muggings dropped because the criminals suddenly realized that a laptop can go in and create a
false return and get a refund. it was all of a sudden too easy to get money. now it's a good thing that people's homes were not being burglarized but in other nevertheless people were being robbed. in this case not only individuals who had a nightmare to deal with by the way and thanks to the irs who helped administratively, once a taxpayer has a false return in their name and all of the other id trauma that they go through of getting back there id but it simply had a whole shift. the taxpayers are paying because of this thefts. thank you mr. chairman.
>> i want to thank you for appearing before the committee today as well as all the senators who have participated. this has been a very interesting hearing. first in recent months i have written about the reissuance of activity by tax-exempt organization. you know how interested this committee is in this matter. they tell me when it was reissued the proposal, we have spent a lot of time and had a hundred and 60000 responses. i personally has have read over 1200 pages of the most thoughtful responses. my commitment has been that we will keep you informed. you will not be surprised and
you will be updated before we issue a proposal. it will provide for comment and public hearing. were not rushing this. we will probably only do this once. >> i want and this chapter of the conservative or liberal groups. it just shouldn't happen and i'm counting on you to straighten it up. >> as i said we want to have a said we want to have a rule that's clear and fair to everyone and easy to administer and operate. you don't have to worry about somebody second-guessing you in the future. i requested documents related to the 2013 criminal activity. i will be responding to him on the matter. i will i will be sending a similar request to your agency and i will be looking forward to working with you on that matter.
thank you for acknowledging my letter about the spending on information technology. i would appreciate a response as soon as possible. >> i think it will be very helpful if congress answers a range of questions about priorities and how we monitor it all. with little luck will get it to you very quickly. >> i want to thank you very much. this came up on very short notice. any questions should be submitted no later than tuesday june 9. with that the hearing is adjourned.
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this hearing will come to order. i want to welcome everybody and wish everybody a good morning and thank you all for being here today for this cbo oversight hearing of the house budget committee. last month, congress passed the first balanced budget of its kind in over a decade. working together the house and senate put forth a plan that would get the nation's fiscal house in order, would grow our economy, strengthen our national economy and make government effective and accountable. last week we were reminded why this effort is so incredibly important. on friday, the commerce department announced that the economy shrank, decreased in size. there have been three such quarter economic detraction since the it began we all hear
from the administration their plans are to spend more money that we don't have, tax more money out of the pockets of hard-working american families and to build more regulatory barriers to jobs and growth. this new normal is simply unacceptable and it's why we've focused on putting forward a balanced budget with pro growth ideas to help grow american families and american businesses. today we begin taking the next steps forward by examining how congress can have a better and broader understanding of how the policies we put forward will affect our budget our economy important programs like medicare and medicaid, our national security and other critical areas of interest and concern. today's hearing will allow this committee to hear firsthand from the very agency that assists congress in that effort, the congressional budget office. i want to welcome cbo director dr. keith hall.
director hall, this is your first time hear since testifying on april 1 and we want to welcome you. you bring a tremendous amount of expertise and experience to the job and i want to thank you for agreeing to serve as director. we look forward to your testimony and the insights that you can share about how cbo works with congress and how it arrives at its conclusions and how we might improve trans parn transparency and more broadly what that means for the economic challenges facing our nation. the reports that cbo has provided to congress over the past several years has shown a steady and troubling decline in economic growth projections. cbo has consistently raised the alarm about the unsustainable fiscal unbalance in washington and what has been lost due to an out of control increase in debt. something must be done and i appreciate the critical role that cbo has continued to play in our efforts to ensure the
money that taxpayers send to washington is used responsibly and that there is transparency and oversight in all government programs. the information that cbo provides our committee and colleagues here in congress is vital to that goal and to the legislative process. having sound analysis in a timely manner that is responsive to the needs of the members of congress will help us advance real solutions. at the same time, it's obvious that congress needs a more complete and realistic understanding of the fiscal and economic impact of legislation that we consider. the work we do on behalf of our communities would be well served by knowing how certain policies might affect the broader economy, job creation, investment decisions and more. and while it's impossible to perfectly predict the outcome of everything, we can and we must do a better job of getting more accurate projections. this doesn't mean throwing out tried practices but it means adding more tools to the
toolboxes. you can barely go wrong and i encourage the budget office to be committed in the analysis whether on the macroeconomics side of the ledger or on specific sides of the interest. cbo has done tremendous work over the last 40 years thanks to its incredibly dedicated staff and i want to thank you, dr. hall, for your work for this agency and i look forward to hard-earned taxpayer dollars being spent more wiser and in an efficient and accountable manner so there is a positive impact on our economy and the lives and livelihoods of the american people. i'm pleased now to yield to mr. van hollen for the purpose of his opening statement. >> thank you, mr. chairman. let me start by joining you and welcoming director hall to your
first budget committee hearing. welcome, dr. hall. the agency that you had the congressional budget office has a well-earned reputation as a nonbiased source of information for the congress and the public. its credibility has been based on the fact that members of congress see it as an independent professional nonpartisan arbitrator analysis of important questions. and i would like to just put in the record mr. chairman a letter that the first director of the congressional budget office alice riflan wrote describing the importance of maintaining that nonpartisan position. >> without objection. >> director hall, i know that you know that you're the caretaker of that independent nonpartisan tradition and we look forward to working with you. i think it's going to be
particularly important now that congress has directed the national budget office to engage in what is commonly referred to as dynamic scoring and there are lots of concerns about how games can be played with dynamic scoring. we saw in an analysis that was released of the former chairman of the ways and means committee tax proposal how those games can be played. the tax committee did an analyses of the potential dynamic effect of that proposal and, not surprisingly, in all his public presentation, the chairman of the committee used the one that showed the most aggressive benefits in terms of economic growth and revenue not a conclusion that had been reached by the joint tax committee. so as you embark in this area i
just understand and i know you do, that it's happening in a political context of a lot of suspicion about abuse of that particular approach. the chairman opened with some comments about the state of the economy and i would just point out that according to the nonpartisan congressional budget office's analysis of the republican budget at least over the next couple of years, it would actually create a contraction. in the economy, it would generally reduce total demand for goods and services and so i believe, as i think all of us do, we need to keep the economy on the right track and that means not taking actions through the budget process and through cross that would actually slow down economic output.
we're also looking at a lot of bills coming to the floor of the house and it's important to remind members that each of these bills is based on a huge accounting gimmick which this committee on a bipartisan basis has rejected in the past and the contingency fund and war savings fund as a slush fund to try to get around the budget caps. and here's what the republican budget committee wrote a year ago about using oco in that way. abuse of the oco cap adjustment is a back door loophole that
undermines the budget process. the budget committee will exercise its oversight responsibilities with respect to the use of the oco designation in the fiscal year 2015 budget process and it will oppose increases above the levels the administration and our military commanders say are needed to carry out the operations. so that was the republican budget committee report from a year ago. apparently they have torn it up, thrown it out the window and using oco for precisely the purposes that they said a year ago would undermine the integrity of the budget process. and i do want to read a letter that was written just the other day to the chairman and ranking member of the appropriations committee from the director of omb where he points out -- and i quote -- as the secretary is referring here to the secretary of defense, ashton carter, as
the secretary and chairman of the joint chiefs have repeatedly stated funding enduring operations is harmful both to military planning and to service member morale. secretary ash carter has called this approach managerial unsound and disparaging to our force. i hope in the coming weeks we will put an end to this budget gamesmanship and approach the budget in a serious way. the president has approached in a serious way, mr. chairman. he said that we need to invest both in additional defense and national security but we also need to invest in scientific research and education. and he proposed to address this issue in a straightforward manner increasing each by about $38 billion. unfortunately, the congress chose to take a back-door path, back door by the testimony of
our republican colleagues. and that has put us in the situation where we're now kind of paddling down this river serenely when we all know there's this huge waterfall ahead. and if our republican colleagues want to keep quietly paddling towards a government shutdown, that's their choice. we hope they will join with us in preventing that from happening. thank you, mr. chairman. i think we all know that is what is happening in this appropriations exercise. the president has made it clear he's not going to support any appropriation bills based on this oco gainsmenship so we hope we can get on with the business of the country. thank you. >> thank you. mr. hall i want to thank you for your time today. the committee has received your written statement and it will be made part of the formal hearing record. you have five minutes for your opening statement and we welcome you. >> thank you.
chairman price, ranking member van hollen and members of the committee, i appreciate the opportunity to come before you today to discuss the work of the congressional budget office. we are pleased to discuss our accomplishments which we believe are substantial and also welcome feedback that you can provide about ways in which we can do our jobs better. in my short time at cbo it's become clear to me that the agency is left with a staff that is knowledgeable, highly skilled, very hardworking and dedicated to providing the best possible objective and impartial analysis to the congress. cbo has been one of the best places to work in the federal government. the congressional act of 1974 created this committee and the budget office together. cbo's work followed by the agency in concert with the budget committees and congressional leadership. the agency's chief responsibility is to help the budget committees with the matters under their jurisdiction. also under this law cbo
supports other congressional committees, particularly the appropriations ways and means and finance committees. we're committed to providing information that is objective, insightful timely and explained. also, we make no policy recommendations. instead, we strive to present fully and fairly the likely consequences of alternative proposals being committed by the congress. in response to your interest for the upcoming year we've requested the funding for three new positions that would be devoted to conducting analysis of certain legislation as specified in the certain budget resolution and analyzing the effects of health care proposals. focusing for a moment on these two topics over sell years now we have been devoting significant effort to developing analytical tools that enable us to assess the macroeconomic effects of fiscal policies. we've included reports and will vote to further develop our
capacity to conduct dynamic analysis in the upcoming year. interest in legislative proposals related to health care on behalf of the congressional leadership remain very high. for example, we continue to analyze proposals to modify the affordable care act and could lead to significant legislative activity. we're in the process of analyzing various aspects of the health care system to assess the effects of future legislation on that system and on the federal budget. on a broader scale, in carrying out our mission of serving the congress during 2015 and 2016 we'll focus on meeting three goals. the first is to provide the -- to continue to provide congress with budget and economic information that is objective and timely. in the upcoming year we expect to provide analysis to congress that include about 20 reports
presenting an assessment of developments during the current fiscal year, the outlook for the budget and the economy, analysis of the president's budget long-term budget projections and options for reducing budget deficits. we'll also produce more than 500 formal cost estimates, mostly for bills reported by committees with about ten times as many preliminary and formal cost estimates, mostly to aid committees in the drafting of legislation. we also produced about 120 score keeping tab lagss for appropriation acts and produce roughly 85 analytical reports and other publications. all of our estimates are reviewed internally for objectivity and clarity. that rigorous process involves multiple people at different levels in the organization. initially we consult with numerous outside experts who provide a variety of subjects. the majority and minority of multiple committees in both the
senate and the house and regularly consult with this committee, other committees and the congressional leadership to ensure that we're focused on the work that is of the highest priority to congress. our second goal is to continue to explain the methodology for analysis clearly. we make our work widely available to the cross and public by releasing publicly all former cost estimates and analytical reports. input from outside experts and external review will remain an important component of our transparency. also, we will continue to have our documents and related information provide explanations that go well beyond just presentations of results. in addition, cbo analysts will explain details that underline the details and staff and present their work and professional conferences. the trans pearn see in our work is very important and advancing it is one of my prime objectives. our third goal is to continue to improve our internal management. we continue to face considerable competitive pressure in
attracting and retaining the highly skilled employees that we need. more than two-thirds of the staff consist of economists and budget analysts. talented people with those background are highly sought by private companies and universities. in closing, i would like to emphasize how much we at cbo have relied on the oversight of this committee and your help in explaining and communicating to others in congress about our role and the complex federal budget process. we rely on your constructive feedback and guidance on important legislative developments and congressional priorities. we are grateful for the support and guidance you've provided throughout the 40 years of cbo's existence and look forward to continuing that relationship for many years to come. thank you. >> thank you, dr. hall. i think, regardless of our political perspective, we want to get this economy rolling again and decrease our liability and our debt because it's that trajectory that helps growing jobs and opportunity.
there are three ways, basically, to get more balance into our fiscal policy. one is to raise taxes, which our friends on the other side of the aisle want to do with great frequency. decrease spending but the real secret is growth. and i want to concentrate on growth and how we get an expanding economy and i'd like to focus on that in my time for questions. as i mentioned in my opening statement last week we received some really disappointing news about the economy. in the first quarter of this engineer year, january through march, the economy shrank. it's the third time since the end of the great recession that the economy actually retracted. i'm not aware of any other recovery, dr. hall, that had this kind of retraction within the recovery itself. are you aware of any recovery that has this recent retraction?
>> i have not. this has been a frustratingly slow recovery with respect to economic output. >> every time the economy contracts or underperforms, economists say there was a reason and in this case it's a winter that comes around every year. would you -- would you comment on why you think that the economy seems to have this fragility to it? what are the things that have related -- that have caused this fragile nature of our current economy? >> i think that's a tough question because it's been frustratingly slow. as you'll see from prior -- our prior projections and everybody's prior projections, we all expected much stronger growth than we've seen. and i say it is rather frustrating. and i think part of it really seems to be slow productivity growth. it seems to be a big part of this. in fact, productivity sort of has a business cycle element to
it. where you get maybe a little slow productivity growth at the start of a recession and then once the recovery kicks in you get fairly strong productivity growth. we just haven't seen that yet. we haven't had at all strong productivity growth. one of the ways to sort of see that is we've had this very modest output growth while we've had reasonably strong employment growth. and really, we've been lucky to get as much job growth as we've had and that's been a function of this low productivity growth. >> what i'd like folks to take a peak at is this slide projected here. these are the projections of real gdp growth for fiscal year 2015 and we're now through two complete quarters of fy 2015. if you normalize those for the years, we'd end up with a growth
rate of 1.5%, clearly not what can get this economy rolling again. so do you think that we're missing some underlying weaknesses in our economy through the customary models that cbo has? are we missing something that the forecasts are not as accurate as we'd like them to be? >> i think economic forecasting is difficult. and it's always -- it's always full of errors. it always had errors in it and there are times that it's very hard to forecast the economy and it's not just cbo. it's everybody. you know, i think i would feel like cbo was missing something if somebody else was forecasting any differently than we are but they are not. so these results are genuinely disappointing but i can't tell you why. >> let me probe a little deeper and see -- do your models -- does an increased tax rates have a drag effect on the economy?
>> yes, it does. >> and do your models account for that? >> yes, they do. >> so your models that are included in the projection for fy 2015 include the taxes through obamacare and that have been incurred because of this administration? >> yes. >> does the increase in the amount of federal regulation have a drag on the economy? >> it can. it's sort of the idea that if you have an overall level of regulation that gets too high, it can slow things. there's actually also this one thing that i think may be a little underrated with respect to some of the economic data is the evidence on job loss, how long people are out of work shows that when people lose a job during a bad economy, they stay unemployed for a much longer time period. it's one of the things that i get concerned about, if we do things that slow job growth during bad times, it delays recovery in the labor market. >> increasing regulation can
slow job growth? >> it can. >> what about uncertainty, something that is hard to model and measure but uncertainty in the market, does that have a drag on the economy? does that decrease growth? >> it seems like it probably can. there's been fairly recent research that sort of suggests that economic uncertainty has been playing a role in this. i have to say, though, that it's still not widely accepted. it's still an interesting idea. it's not sort of the conventional view quite yet but i think it's quite interesting and that could be that it's having an impact. >> are you able to place that into your modelling? >> no we are not. >> so there may be things that we are not capturing with our conventional modeling? >> that's right. >> may we have the second slide, please? this is the one that concerns me and ought to concern us all. we are now in the worst recovery, worst recovery since world war 2 coming out of an economic down turn and the
congress budget office for growth over the next ten years average growth over the next ten years given in january '12 '13, and and 2015. and every time you have a decrease in growth then what that does is increase deficit. so what are the factors that you believe that the cbo believes is contributing to this continuing downward trend of growth projections? >> well certainly we've had some growth in consumer spending. that's actually held up pretty well, which is the really important part of this. but i think i swing back to the idea of the productivity. that productivity has not only
rebounded but hasn't shown the usual sort of recovery that it has in the past. that's the most notable thing to me about this. >> and if we were to try to -- this is obviously a rate. the average rate over the last three years is 3.3% annualized. so we're a full point below, a percentage point. people say that doesn't make a difference. a percentage point adds -- we could decrease the deficit over the next ten years by $3 trillion. that's the incredible importance of growth. so one of the kinds of things that we ought to be looking at as a congress to assist and get the economy growing again? >> well, i certainly -- i certainly believe in getting at least a credible plan on solving
the federal debt problem because that is looming. that's going to continue to be a problem and that's going to continue to cause problems. it's going to have a significant effect on economic growth. and as you pointed out, i think in addition to the spending and revenues, economic growth is important. we maybe don't talk enough about that. economic growth is extremely important and it can solve a lot of issues. if you look at our long-term budget projection actually it's coming out soon, one of the things we talk about is how much a difference in productivity growth over the next 25 years makes for the budget outlook. and that's a really good indicator of the importance of economic growth. >> let me just, in my final minute here, try to put a face on all of this. if we truly have 2.3% growth or even less over the next ten years, as opposed to our 40-year average of 3.3% growth what does that look like or feel like
to the average american out there? what do they sense either is happening or isn't happening because of that decrease in growth? >> certainly one of the effects it's having is slow income growth. to get good, solid wage growth, you need a much tighter labor growth than we've had. again, that sort of shows up and even though we're having pretty strong or pretty reasonable job growth, because of the economy it's not a tight labor market. and it slows revenue and things like that. >> dr. hall, thank you. i think it's important for folks to appreciate that these are real consequential decisions and it can have an adverse effect if we can't get the economy rolling
again. i'm pleased to recognize mr. van hollen for his opening questions. >> thank you mr. chairman. there's no doubt about the fact that increased economic growth would be a very good thing. we've seen 62 consecutive months of good job growth, which is the longest sustained private sector job growth since the end of the 1990s. but obviously the more we can do to increase economic growth, the better. you're knew but i'm assuming the cbo has not changed its analysis that the republican budget proposed would actually slow down economic growth in the next couple of years. is that the case? >> anything that slows aggregate demand in the near term could slow economic growth. >> yes. i understand that. and so -- and the republican budget slows aggregate demand,
according to the congressional budget office. correct? >> that's right. so i do think it's worth emphasizing, since i thought we were all concerned about the last quarter's figures although there are powerful arguments that these have to do with some seasonal adjustments, but nevertheless, we should be concerned about anything that slows down economic growth in the short term and congressional budget office has concluded that the republican budget would slow down economic growth in the next couple of years. i understand there are other arguments with respect to long term but let's just focus on that for a moment. because it's also the case, is it not director hall, that when you're looking at growth rates in the future compared to historical growth rates that cbo wants to anticipate that output will grow much more slowly than it did in the 1980s and '90s
primarily because the labor force is expected to grow more slowly than it did then. i'm reading from a cbo document from january of this year. i'm assuming the cbo has not changed that analysis. is that right? >> that's correct. >> so one of the ways we can address the issue of an aging workforce in a way that actually boosts overall economic growth would be by implementing comprehensive immigration reform. in fact, the congressional budget office concluded before you became director that the bipartisan senate immigration reform proposal would be something that would help mitigate this aging workforce issue and boost economic growth. and has cbo changed that analysis since you became director? >> i'm not familiar enough with that analysis to actually comment on it but i don't know
that we've looked at that lately. >> well, i think it's true, we probably do all share the view that more economic growth is better so i think it's important to stick to the facts and they have concluded that the republican budget will slow down economic growth in the next couple of years and that the major reason long-term economic growth is not as high as the historical average is because people are retiring and not part of the workforce and one way to address that is through immigration reform which allows more people to come into the workforce and that would boost economic growth and reduce our long-term deficits and again that has been a conclusion reached by the nonpartisan congressional budget office. so i hope when we're really actually looking at policies, that can impact economic growth we will focus on what the nonpartisan professionals tell us is the reality of the case.
you refer to dynamic analysis. as you well know even under the previous rules the joint tax committee and cbo engaged in dynamic analysis. the difference now is the congressional budget office has come up with one score which is different than analysis right? >> right. >> and so that is where there's potential -- i think many people believe for mischief and concluding that there's more certainty in some of the cbo estimates going forward than there is in reality. what i want to ask you about is cbo's capacity to apply that kind of analysis to the investment side of the equation because there's been a lot of focus on the tax side.
with respect to the categories of the budget that relate to federal investments, for example, investment in education, the cbo assumes that additional federal investment in that -- in those areas yields half of the return of the average private sector investment with a delay of five years. is that correct? >> that is. >> and so there is no assessment currently of different kinds of investment, like investment in education versus investment in infrastructure versus investment in places like the national institutes of health. is that right? >> that's right. obviously we could do that sort of work. >> that's really what i'm asking. because if we're going to be going down this road which i think has a lot of potential pitfalls with respect to the tax side of the equation are you, as an organization, going to be spending the time and effort to
better refine your capacity to do this kind of analysis with respect to the investment side of the budget? >> we plan on improving everything. >> there also are parts of the budget that are not categorized currently as investment but still could have a positive economic effect. do you agree with that? >> i imagine so. i'm not sure what you're -- >> well, i mean there was a study done just within the last 18 months, i believe regarding medicaid spending. and that's not part of the budget currently that's categoryized as investment so when cbo does a crude analysis of the impact of investments on growth medicaid spending is not
counted and yet as there was a study that indicated that medicaid spending for children has significant feedback effects on federal revenue. found that children eligible for past medicaid expansion earned higher wages and paid more taxes as adults, enough for the federal government to recover 14 cents on every dollar by age 28 and 56 cents by age 60. so if that's accurate, that's a pretty respectable return on that federal investment. now, i know it's a new study. i know cbo has not had time to evaluate it. but my question to you is, is cbo now going to take a very broad view of those kind of programs as well in terms of the impact they might have on positive economic growth as this particular study found with respect to medicaid spending? >> actually the goal is to look at the evidence and to apply the
macroeconomic effect analysis -- the macroeconomic effect analysis on things where there is evidence of dynamic effect. so we will do that. >> i mean, this is a whole new world because while there's been a lot of analysis done, what you're being asked to do now is pinpoint a score. and i think, as you go through this exercise, you're kbggoing to need a lot more time investigating the investment side. a lot of work has been done on the tax side. a joint tax provides a dynamic analysis on all of the big tax bills that are introduced right? they already do that. we've not seen that kind of in-depth macro analysis with respect to cbo. you have this crude measure right now for what you consider the investment side of the budget. first of all, it's crude. second of all, it leaves out all
of the spending like the medicaid spending that is not categorized as investment. so i'm just letting you know because you're now charged with this important agency and you're charged with the time that you've been asked to undertake this whole new enterprise. everyone is going to be watching very carefully to make sure it's put in place and implemented in a fair balanced and mostly in an accurate way so we have an understanding of the impact on the economy. so mr. chairman thank you for this hearing. we're in the middle of these appropriation bills and we are headed right now on a trajectory that seems like we're going down toward that waterfall, toward a government shutdown. the president has put on the table a plan to address this each in a straightforward way and we hope our colleagues will join us in finding a way to avoid the government shutdown that seems to be looming on the
horizon with the coming fiscal year starting october 1st. >> thank you. mr. rokita. >> i think the chair. dr. hall, thank you for being with us today. the plan i see from the president only increases our deficits and debts and over the near and even longer term and so therefore i don't think it's a viable solution. let's focus on the debt for a minute. it's my understanding that the debt as much as we're working and have evidence to show that are deficits are decreasing because of the leadership on this committee and, more recently, throughout congress, including for the first time since 2001 that we've had a budget resolution that the debt itself is still expected to expand, the 77% by the budget window and there after it's the red menace that some have
described is becoming a tidal wave because 10,000 baby boomers are retiring into unreformed programs. there's a debt clock in my office. there's over $18 trillion. quite frankly, as much as i put that out there for my constituents to see, it's hard to understand and visualize what $18 trillion is so my first question to you is can you talk to us in terms of what this means to the individual family what an increase debt load does to our standard of living? >> first of all, let me just say that the debt level is at right now 74% of gdp. that is really high. it's only been that high once and it was after world war ii. the extraordinary circumstances after world war ii. it is a very high level. and what is going to happen is we may have a few years where
it's at that high level if the economy continues to recover. at some point, the effects of the aging population and rising health care costs are going to make that start to grow again and it's eventually going to get to an unsustainable level. and by unsustainable level we mean the ability of the u.s. government to borrow money is gone. it can disappear at some point. that would make it a really serious meltdown. we're talking about a significant drag on the economy and economic growth. we're talking about slower income growth for folks. and all of those things are there and one of the things that i think i need to point out is as soon as you start to address this, the less you have to do to fix it because if you wait what you need to do to fix it gets
more difld and more difficult. i mentioned one more thing because it relates to what you're saying. the debt has almost doubled since 2007 so our ability to deal with an economic crisis going forward is going to be really hampered with the ability to deal with it is going to be very difficult. that's a really important part of it going forward. we don't want to have another recession. >> let's talk about the fix and what fix is this, as you mentioned. do slightly reforming the programs that are driving our debt medicaid medicare social security, the interest we owe ourselves and other countries, for example that make up 67% are spent, will that do it moving around the edges or will we need total restructuring if they are going to be available to my children, for example? >> well, we certainly need
something pretty substantial and without talking about particular things we spent some time producing deficit reduction where we give you options to look at and you can get an idea for how big of a change we need in things to stop this growth in debt. and one of the things that actually isn't in here that you should keep in mind is when you look at the long-term budget outlook, one, you're at a high level, second, it's still getting worse, the trajectory part of it. so when it gets to be something like -- if it gets to be 100% of gdp in 25 years it's not only going to be 100% but getting worse, which is why i'm saying something pretty significant needs to be done. >> you mentioned trajectory. >> yes. >> some account for debt in terms of what acceptable levels are. but you don't -- you talk in
terms of trajectory. there's a difference there. >> well the notion is that, one, you don't know where a tipping point is. you don't know how big the debt needs to get before there are really serious problems. one of the things that factors into is not just the level but how believable it is for people that it's going to get under control and going to be fixed. that's what i mean by the trajectory. there's a credibility part to this. >> >> thank you. i've been listening very tentatively. it seems to me what we want to do in the opening questions here is go back to the decade when clinton was the president until the end of bush's regime when there was an $11 trillion turnaround. you remember >>
and how we got to this deficit. and how we got to this deficit. on top of the, while on the subject of tax cuts, we had tax cuts from 2001 and 2003 do you know, what the predictions were to make the analysis then? for the economy? but for the job picture. we all know what the numbers are. and take a graphic way and you can take what i just said a way, the fact of the matter is with dynamic
scoring. i am concerned about your decision mr. chairman to used dynamic scoring with what much of the discussion is about with the micro economic analysis that the cost estimate with this type is an uncertainty with the low number then i never you could make of it with every you wish they produce widely different cost estimates to fed's those numbers easier for example, the analysis of the tax reform proposal uses two different models a few will remember to come up with eight different estimates for $50 billion to
700 billion. u.k. dry 5500 mack trucks for that to use that plan of reform that future congress will take to reduce the deficit. i have been here long enough to know there is no guarantee of what congress will or will not do in the future. you know it and i know it including dynamic scoring is part of the budget process. so i want to start off with an easy one of the affordable care act.
so the deficit is projected as a percentage of gdp through 2018. nonetheless the republican budget has each of those committees to reduce the deficit. by repealing the hca - - affordable care act, doing a little dynamic analysis ourselves. i am not as efficient as you are by any stretch of the imagination but in your opinion if we replaced it aha with policies of $1 million what would that impact the?
>> obviously that analysis was valid and one of the things that will happen looking at as a dynamic effect that will help reduce that deficit. >> you say if we repeal the ac a? >> the gentleman's time is expired. >> i appreciate the extra time. if i can let me start with the discussion of the historical record of the 1990's with the issue of debt. on the democratic side of the aisle president clinton
does deserve some measure of credit to say you have a republican congress. that is for sure but the reality is the first he had pc did not have much to do with that but we did get a real peace dividend. second, we had baby boomers working in their peak years and finally to have the internet boom that nobody can take any credit for at the unprecedented levels for capital gains. we don't have those today. we're in a state of war we can debate that we will spend more as the percentage of budget and gdp. baby boomers will be retiring and living a lot
longer than any generation so they will draw social security and they are not predictable but we don't see a growth rate like'' we have seen in the past so we have unique challenges to transcend what the president of the 1990's have we don't have those favorable conditions to work with. we can bring down the deficit in a bipartisan way and don't give either side enough credit. obviously belittle reduction than what we had before and a little bit of economic growth. the raise federal revenue over decades and those
brought that deficit dash owned -- down to around 80 or somewhere in that range. is that sufficient to continue to lower the deficit as we go forward? >> what will happen is the effects of the aging population and the health care cost is much more apparent going forward and a much harder time to keep the debt at its current levels. >> but what is the impact of economic growth? >> it puts us at risk in terms of economic policy and
at some point we get to it to pinpoint -- to a tipping point. >> is there any way to deal with the debt without dealing with entitlements? >> obviously entitlement programs are part and part of the growing debt of our forecast. >> the committee has put forth provocative ideas to slow their growth. i know the chairman has talked about social security in the past to have a process to address that that has the administration put out any proposals of
entitlement reform? how long have they been in office? seven tier? >> obviously i am leading the witness if we were in a courtroom but we know it is your we have spent around seven years and frankly the committee has been putting out ideas in the congress is ready so i hope they take that opportunity was twitter pretending day word disappear. >> your recognize for five minutes. >> mr. chairman, do you on a
house? did you pay cash? >> i did not but i do spiky went to in debt? >> so we have a population that understands the investment creates debt and in the end of 30 years you will have a house and that is worth quite a bit more that is true. but the etf of investment is one that we add lost sight of a canal was reading "the new york times" on the 22nd of april that a great political leader had come
down with a suggestion to double the nih and i asked to put his editorial in the record but even as they let financing for medical research stagnate that should try a double every fiscal conservative but when it comes to breakthroughs the most expensive diseases it alone can bring the resources with one-third of all medical research so it does that research the chairman is responsible to let financing for that basic financing but that last
budget was $1.7 billion less not to double but down and 14,000 less grants so tell me how that spurs the economy to cut investment? explained how that spurs the economy. >> i don't know if we have done analysis. >> can you imagine? direct is certainly there are things on the spending side that have dynamic effects. >> day you think the national institutes of health over the course of the last 50 years had a positive effect of the
economy? >> i just don't know i don't want to speak lightly. >> you really are a politician. looking to for though one armed economist to say on the one hand this and the other hand that you cannot look at our industry or the health care industry to cover 16 percent of gdp you see the national institutes of health with all researchers they have done with aids and cancer and heart disease that none of that has been positive? >> i did not say that. >> you did not say had a positive effect. >> but without that type of research we would be like sierra leone or botswana.
>> and we say we will go forward with innovation to do those things to innovate that is bnsf and all the places where we invest money. we'll call the place is invested we have to cut back so then you are cutting your own throat after the second world war we gave a free college education. that is investment. >> your time is expired. >> just to pick up on that point at the end of world
war ii didn't harry truman abolish the excess profit tax in 1946? to reduce the force by 10 million federal employees. and didn't the keynesian sometime warned us of 25 percent unemployment rate ? >> i don't know my economic history. >> you will find it is a fact and that we had the post for economics and my answer immediately paying
$230 million per year that if you're the average family paying an average taxes $2,000 that you sent to the government did nothing more than rent the money we have already spent. . . world war ii when we carried this much debt there was doubt if we could continue to 1946. resources was exhausted credit was shot. we are at that point at this moment in history and i am very concerned what happens to our ability to respond to an international crisis if one is hoisted on us in the position we're currently in. the budget that congress just adopted sets a course back to solvency. how important is it that we stay that course. >> i think it is important that we do